India Should Get Back the Billions of Black Money held in Swiss Banks

Addressing a press conference to commemorate the 60 years of Indo-Swiss Friendship Treaty, [The Swiss Ambassador to India] said “Switzerland was accused of giving shelter to black money and there has been a lot of inflow of such wealth from India and other countries of the world,” Dreyer said. The Ambassador said “I would not say it would be stopped 100 per cent (under a new law). But through this measure, it would be controlled up to a certain limit.” [15-03- 2008 NDTV Profit]

Swiss ambassador was at least forth coming about the venality of Indian elite–

Under pressure from federal authorities, the Swiss bank UBS is closing the hidden offshore accounts of its well-heeled American clients, potentially allowing their secrets to spill into the open. In a step that would have once been unthinkable in the rarefied world of Swiss banking, UBS will shut about 19,000 accounts that prosecutors suspect have gone undeclared to the Internal Revenue Service. UBS will transfer the assets to other banks or other divisions within
UBS, or will mail checks directly to the account holders, creating paper trails for federal prosecutors who are examining whether UBS clients used such accounts to evade taxes.
The clients now face stark choices: they can cash their checks, and thereby alert the authorities to any potential wrongdoing, or not cash them, effectively losing their money. Or they can transfer the money to new banks, a procedure which, in the case of foreign banks, requires depositors of more than $10,000 to report the new account to the Treasury Department

UBS –the largest Banking Institution from Switzerland has also committed to provide names of top 250 persons who have kept money in offshore account out of 19,000 accounts to US authorities. UBS has also committed to pay a fine of USD 780 million to settle claims that it has de-frauded US Internal Revenue service. Now US State department is compelling it to disclose about 52000 American accounts kept with UBS.The original charges are that the UBS off-shore accounts have helped Americans to hide USD 18 billion in 19,000 accounts.  As of now the settlement is that anyone opening off-shore account has to do it through US regulatory bodies.

Traditionally Swiss authorities used to argue that if there is no criminality under Swiss laws [which do not recognize currency violations and tax evasion as offences] the information on offshore accounts could not be divulged. The same position was taken in Bofors case also. Now that wall has been breached by this US agreement with Swiss authorities.

UBS, the world’s largest private bank, also said, that it would stop offering to American clients offshore private banking services that are not declared to the I.R.S.
Prosecutors contend that UBS helped wealthy Americans hide about $18 billion, thereby evading taxes of $300 million each year. UBS is struggling to maintain its centuries-old tradition of Swiss
banking secrecy amid mounting legal pressure from the Justice Department to turn over client records. It began handing over some records last summer, causing consternation in the Swiss banking community. The checks and transfers will create paper trails because they move through bank clearing systems.

In all these discussions one critical aspect is not to be forgotten and must be brought to the surface. That is the wealth hoarded by Indian leaders in commerce/politics/military/arts etc in the foreign banks for the last five to six decades. A recent development pertaining to such tainted money makes us alert to our own wealth stored abroad.

Liechtenstein is a country as well as a convenient “letter box” for moneyed people all over the world to hide their ill gotten wealth. It is a small principality where if you jog a little longer you may end up in the next country. The crown prince with a difficult to pronounce name like Alois von und Zu Liechtenstein [notice that the Prince’s surname is that of the country!] is angry with Germany for launching a massive tax-evasion investigation involving funds hidden away in his countries vaults. Germany’s intelligence agency seems to have paid an unnamed informer more than USD 6 million for confidential and secret data about clients of LTG group a bank owned by the Prince’s family.  The revelations have already led to the resignation of the head of Deutsche Post—the former German mail service—which is currently the world’s largest logistics company in the world. The Lichtenstein leaders are furious and have focused all their ire at the theft of the data rather than on the facts of the case.

The German foreign intelligent agency BND seem to have got more than 700 clients of the LTG bank and the German prosecutors are using this information to target hundreds of suspected tax evaders in the last few days. In the meantime LTG claims that the “stolen data’ contain information about 1400 clients and only 600 of them are Germans.

The German Government has announced that it would share information on accounts held in the tax haven with any Government that wanted it.  The spokesman for the German Finance ministry Thorstein Albig has indicated that they would respond to such requests without charging any fees for the information. Finland, Sweden, and Norway have expressed interest in the data obtained by the Berlin intelligent agency.

Now the interesting and intriguing part. Indian government is totally silent on this issue and did not approach the German Government for a long time for looking at that data without any charges. Later it wrote a cursory letter under pressure from Opposition but has not disclosed the response of German Government. It is common knowledge that trillions of dollars of Indian money is in various tax heavens like Antigua, Switzerland, Bahamas, Liechtenstein, Isle of Man, and St.Kitts etc. Throughout the Nehruvian socialistic period under invoicing of exports and over invoicing of imports was very common. Along with that substantial portion of external earnings were siphoned off to these tax heavens. In a socialistic way all leaders be they business, political, film, sports or bureaucratic participated in creating what we may call Secular Wealth that is cutting across any type of caste or creed distinctions. Also, good portion of the defense commissions were settled abroad. Plus some of our bureaucrats and entertainers and artists have also accumulated wealth abroad.   This lobby is well entrenched and one of the main losers in the appreciation of the rupee.

Worst part of the story is the loss of these deposits to Swiss banks themselves up on the death of some of these depositors who have not passed on the relevant account information to their progeny. The Swiss banks appropriate such sums after some years [seven to ten] after the death of the beneficiary if there are no claimants. These are operated using codes but most of them require passport and its number as a proof. That is the reason one finds some persons travelling to Switzerland with all expired passports. Zurich is the only European town which has Hindi slogans written on the side of its trams. Of course it is supposedly linked to Bollywood but the India traffic to Zurich is seen to be believed.

It is estimated that between 500 billion and 1400 billion is hoarded in Swiss banks and add with that the money stashed in territories like Virgin islands and Bahamas and other assorted tax havens. We need to take steps to bring it back to India. The mechanics can be worked out in terms of amnesty and “Swiss bonds” issued against these dollars .It can tremendously boost our foreign exchange reserves and facilitate infrastructure investment.

To start with we can add one column in our election affidavits regarding wealth accumulated abroad. Of course the politicians are not going to declare the ill gotten wealth .But it may be useful for future regarding provision of false affidavits. The entire tax efforts of countries like India are subverted by these deposits.

Second and most important issue is pertaining to financing of terrorism. These secretive and non-transparent tax heavens can be a serious threat to India since the sources and uses of funds are not clear. The gap between tax evasion and terror financing is getting smaller. The lesser the transparency the greater the threat for civilized societies. From that point also it is imperative for us to get these vaults open. The third point is that this should become a major issue in World trade and financial negotiations since that which belong to us cannot be denied to us for long. Entire issue of global financial flows and cross country free flows become meaningless due to the presence of these tax heavens. Indian lead will shake the world and help large number of African and Latino countries. Already the Polit Bureau of CPI [M] has asked for Government action in the light of the UBS developments. Baba Ramdev has demanded that politicians to take steps to bring back the money. It may be difficult to expect the major parties to take it up since the hands of many of its leaders are stained with rust and dust of Swiss bank vaults.

In the case of Bofors it was the Government of the day versus the opposition parties and now it has to be a mass movement against all these tainted leaders. The citizens of India should fight to uphold the values of our republic which is not just a market or museum piece but a living civilization wounded by colonialists and looted by current Thanedars ruling the roost in the corridors of power. If the leaders keep quiet on this burning issue then we can conclude the elite of the country has failed us, Of course the DDM [ Desi Dork Media] –both electronic and print- will be campaigning to “fill up pubs’ in the name of freedom- rather than any serious issue. Our media has become just entertainers and not interested in any important issue.

Let us remember that the past history suggests that the elite of India failed India and not the ordinary farmers or workers. The elite helped in the plunder and devastation caused to this country.

The thunderous silence of our elite in politics / media / business / bureaucracy and arts speaks volumes about our collective guilt. “No criminals” in politics is a good campaign. But can we have leaders with funds stashed abroad? The black money abroad is the Gangotri of all crimes.

It shows our distrust about our mother land and contempt for Dharma. Let us deal with that first.


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